August 21, 2023 • 44 mins
Do you ever feel like you're navigating a labyrinth when it comes to tax strategy, especially when expanding internationally? Fear not, because we've got James Bright from Avalara, a leading tax management solution company on our show, ready to guide you through the maze. He shares with us Avalara's three-pillared approach to tax management: tax registration, calculating tax at the transaction stage, and ensuring timely and accurate tax filing.
We tackle the nitty-gritty of cross-border commerce, diving into the challenges and solutions that come with it. From staying updated with the ever-changing tax legislation to understanding how tax profiles impact businesses of various sizes, James offers his expert insights. We also debunk some common misconceptions about cross-border sales tax, and how it influences the customer experience. The importance of transparency, especially when it comes to delivery duties and tax-inclusive pricing, is highlighted, along with ways to enhance efficiency in transactions.
Lastly, we pivot our conversation to the significance of compliance and market research in international expansion. James emphasizes the perils of cutting corners when it comes to tax calculations, and the potential long-term effects of non-compliance. We wrap up the episode by peeking into the future, exploring potential trends in the ecommerce space. So, join us on this enlightening journey, and equip yourself with the knowledge to make your business tax compliant and ready for international expansion.
We tackle the nitty-gritty of cross-border commerce, diving into the challenges and solutions that come with it. From staying updated with the ever-changing tax legislation to understanding how tax profiles impact businesses of various sizes, James offers his expert insights. We also debunk some common misconceptions about cross-border sales tax, and how it influences the customer experience. The importance of transparency, especially when it comes to delivery duties and tax-inclusive pricing, is highlighted, along with ways to enhance efficiency in transactions.
Lastly, we pivot our conversation to the significance of compliance and market research in international expansion. James emphasizes the perils of cutting corners when it comes to tax calculations, and the potential long-term effects of non-compliance. We wrap up the episode by peeking into the future, exploring potential trends in the ecommerce space. So, join us on this enlightening journey, and equip yourself with the knowledge to make your business tax compliant and ready for international expansion.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hi, welcome to the Big Commerce podcast.
Hello, welcome to a brand newepisode of the Big Commerce
podcast.
I'm your host, luigi, and intoday's episode I'm joined by
James Bright from Avalara.
Avalara is a tax managementsolution and partners with many
platforms, including BigCommerce, and in today's episode
(00:22):
we talk about the importance ofa tax strategy and some of the
common pitfalls that merchantscan come into when expanding
internationally, and why asolution like Avalara can really
help your business as itthrives and grows.
Hope you enjoy the show.
Hi, james, welcome to thepodcast.
Hi.
Speaker 2 (00:41):
Luigi.
Speaker 1 (00:42):
Thanks for having me.
Are you enjoying our wetweather here?
Speaker 2 (00:46):
Yeah, we were just saying that it's becoming a
recurring cleaning out the storyof the summer, so hopefully
it's going to pick up soon.
Speaker 1 (00:53):
Yeah, and now I remember the year of the
Olympics.
It was like a rainy year.
So we do kind of.
I don't know I'm not ameteorologist or anyone that
takes interest in the weather,but I think we must have these
ebb and flows where it's justgoing to be a washout.
Speaker 2 (01:06):
Yeah, and to be honest, people will hate me for
saying this, but I prefer thisto the scorching heatwave that
we had last year, becauseworking from home some of the
week it's uncomfortable, got ayoung family, my dog hates it,
and so on.
So yeah, I'm only about theweather outside, but it's
actually okay yeah.
Speaker 1 (01:28):
Well, I guess we have to pause for a second for our
clients and partners in thesouth of Europe who are kind of
like you, you haven't got a clue.
Speaker 2 (01:37):
Yeah, exactly.
Speaker 1 (01:39):
So look, james, thanks for taking time to come
on to the podcast.
You're from Avalara.
Why don't you just introduceyourself and the company that
you work for?
Yeah, sure?
Speaker 2 (01:50):
So my name is James Bright and I'm a Partnerships
Manager at Avalara.
I've been working for thecompany for around three and a
half years now, started off onthe sales side of things and
didn't have a tax background,but learned a lot very quickly.
And then, yeah, sort of foundmy way into a partnerships role
(02:12):
after about 18 months, andthat's primarily focused on
e-commerce, which I enjoy verymuch.
So, yeah, the company itselfwe've been going for near on 20
years now and was founded in theUS, all with the goal of
simplifying US sales, but nowwe've grown to become a global
(02:34):
company and now focus ontransactional taxes such as GAT,
gst and customs duty and allthat fun stuff.
So, yeah, that's me at thecompany.
Speaker 1 (02:44):
Which I guess kind of in the age of kind of
cross-border trading andinternational commerce, is
really important because kind oftax I guess is one of the few
consonants that pretty muchevery country is going to ask
you to comply with.
And kind of going back to theoriginal objective of
simplifying US tax management.
I mean, I've spoken withmerchants numerous times in the
(03:04):
US about tax management fordifferent states.
It's just incredible howcomplex it can become and the
responsibilities that themerchants in the US have in
terms of reporting and so on.
Speaker 2 (03:17):
Yeah, it really is.
The US is probably the mostcomplex tax-raging in the world
when it comes to the sheeramount of tax jurisdictions it
has and the sheer amount of taxrates that it has, and that
really makes it very difficultfor a merchant to get the right
tax treatment on an invoice.
(03:38):
So, yeah, that's how thecompany was founded really.
So I suppose we've gotsomething to be thankful for.
We've built a business to beable to solve that challenge.
But yeah, once you'vecalculated the tax, then of
course it's filing it and youknow, in different states
there's different ways to filethe taxes.
(04:00):
Some prefer it monthly, someprefer it quarterly.
Speaker 1 (04:04):
So no two states are the same as what I'm getting at.
Yeah, I mean, I guess it mightput you out of business, but
really, if they just got rid oftax altogether, the world would
be a much simpler place.
Speaker 2 (04:13):
Yeah, we wouldn't have much to talk about, to be
honest.
But yeah, and whilst tax is avery dry subject, it's obviously
tied to, you know, a necessarypart of the merchant strategy,
because, you know, if you don'taddress it in the enemy stages
(04:33):
then it can become a problem.
But obviously it's going tomake that as easy as possible.
Speaker 1 (04:38):
Well, let's try and make tax management as sex as
possible in the next half hour.
So, fundamentally, you startedoff in the US with the objective
of simplifying tax managementfor merchants.
So what's the methodologybehind that?
You know how Avalara approachestax management for recon
merchants predominantly.
Speaker 2 (04:59):
Yeah, sure.
So I mean we break it down intosort of three key areas and I
call them the three pillars ofcompliance.
So we'll help a merchantunderstand where they need to
register for tax and help themcomplete the process as required
.
We'll also help them calculatetax at the point of transaction.
You know whatever channelthat's happening on, if it's in
(05:19):
their ERP or their e-commerceplatform.
And then the third pillar isfiling the tax.
You know wherever they havethat tax obligation, we will
help them submit the tax on timeand correctly to be the
relevant authorities.
So I kind of just use thatthree pillar approach just to
simplify what is, overall, quitea complex process.
Speaker 1 (05:42):
So it's really kind of from an ATA's perspective.
Somebody's saying, right, Iwant to expand either
internationally or, if they'rein US and I want to start
selling kind of cross state andso on.
They can really start thatjourney with you because you'll
be able to kind of tell themthis is what you need to be
doing and then, once they'veregistered and done all the
necessary paperwork, you canthen make sure that they sell
(06:04):
complying to tax laws.
And then the reporting side ofthings on the various intervals
you said, whether it's monthlyor quarterly to different states
.
You help with that as well.
So really, from a merchant'sperspective, you really do
support them in a tax managementrole.
Speaker 2 (06:19):
Yeah, absolutely, and whilst we're first and foremost
a tax technology company, Imean to work at Avalari and
obviously you have to know abouttax and our account management
team and analysts are allexperts in what they do.
I mean they're on hand to beable to help merchants as and
when they have questions andobviously we're there to make
(06:40):
merchants aware of changes inlegislation and put things on
their radar so that they'reproactive with tax and not
having to react to a negativetax situation.
So, yeah, it's a combination ofservices, human input and
solutions in order to makecomplements manageable for the
merchants.
Speaker 1 (07:01):
I know kind of when I get asked questions by
merchants around tax like, myanswer is just like Avalara, I'm
not even getting into it, justAvalara.
Because I mean we had that a fewyears back with the one stop
shop where kind of, like you say, changes to legislation and
stuff that I cannot become likea tax expert, or even not even
expert, but just somebody thatstarts understanding tax changes
(07:21):
in different jurisdictions andso on.
So really also from ourperspective it's great because
it means that we've got anexpert partner that can take
that burden off us and say,right, we'll take you from here,
we'll advise and we'll makesure that everything's kept up
to date and comply.
Because you must have seen inthe last few years a big uptake
(07:43):
in terms of merchants thatincrease the cross border.
I mean, obviously with Brexitthere was a people that took a
step back, others that kind oftook a step forward.
So I don't know if it kind ofnetted itself out, but we get a
lot more requests from merchantslooking to do that cross border
trade and understanding whatare the tax implications for
(08:04):
them.
Speaker 2 (08:06):
Yeah, I mean that's a really good example of how
closely we work with partners.
I mean, avalara is a partnerfirst organisation and all of
our partners, whether they're atechnology partner, like
BitCommerce or Shopify, forexample, or whether they're an
agency partner, they're oftenbetter placed than we are to
(08:27):
identify a risk to theirmerchants' business and by
having that relationship meansthat agencies like yourself can
consult with us firsthand andthen engage with us and the
merchant conversation as andwhen required.
So working with partners isreally important to us and, as
you say, as those situationspresent themselves, such as
(08:50):
Brexit, we're on hand to be ableto deliver the content, to
drive awareness, but also have aconversation with these
merchants and figure out thebest way for them to handle
their compliance.
And just to touch briefly inBrexit, I mean, that's one of
those things where it creates alot of additional interest for
(09:11):
us, which was great but at thesame time, led to a very busy
period for us.
And yeah, you'd like to say somemerchants took a step back.
They didn't want to deal withit, no-transcript, had to get on
with it and ultimately addressit head on.
So, yeah, as and when theselegislative changes come in from
(09:32):
governments and so on.
You know it's at least one hand.
It's good for us.
At the same time, you know it'sdifficult for merchants and we
understand that.
So you know we want to workwith merchants and partners to
obviously be on hand as and whenit's needed.
Speaker 1 (09:48):
I don't know how many kind of webinars I've been done
through that period with Avalarand various trade organizations
to understand it, because it'sjust not possible to kind of
stay, you know, stay up to datewith all the various changes in.
you know, we're a global agency,so we work with merchants
throughout Europe, throughout,well, north America, usa and
(10:09):
Canada, and it's just notpossible for us to kind of keep
up to date with typelegislations there.
You obviously kind of sitfurther up the food channel, I
guess, where we are.
So we work with, obviously, ourset of merchants and you work
with platforms that have theiragencies, that have their
merchants, so you obviously havea wider net of merchants that
(10:29):
you work with.
Do you see some kind ofcommonality around the
challenges that merchants facetrying to kind of grow their
cross-border internationalcommerce business?
Speaker 2 (10:42):
Yeah, I mean.
The beauty about it is Avalar.
You're presented with manydifferent types of scenarios on
a day-to-day basis.
You know if we're dealing witha software company, their needs
are very different to ane-commerce merchant.
The legislation of differentgovernments will affect them in
different ways, but thecommonality is at the time it's
(11:06):
awareness.
You know we speak to companieswho are of a size where you
think they'll probably knowbetter, but in fact they've gone
into growth mode overnight andguess what?
They're now only addressing thetax situation in the way that
they want to.
So I would say that you knowawareness is something that we
(11:28):
spend a lot of our time.
You know, working with partnersand merchants, helping them
understand.
You know what they should bedoing from a compliance
perspective.
Like I said, we like tosimplify it by focusing on
registration, calculation andfiling, but often you know the
starting point.
Very much is difficult tounderstand.
You know, where should Iregister?
(11:49):
Where should I tell that?
Speaker 1 (11:51):
And you touched on their saying kind of you know
you've got merchants that havehad that kind of hyper growth or
at least some decent growth,and so you work with both, both
kind of you know, I guess,startups and SMBs, but also
enterprise merchants, to helpthem with their tax, tax
management.
Do you find that?
Does the process of taxmanagement change as a business
(12:16):
scale?
Like, do you find that thereare different complexities or
different I mean, I guess eventimes my question when you start
looking at merchants that havemaybe stock in different parts
of Europe and so on and whateffect that has on tax
calculation, depending wherethat stock goes?
Speaker 2 (12:34):
Yes, now, often the size of a business does not
match the complexity of theirtax profile and vice versa.
So it will depend, and that'swhat I say kind of every
scenario that you view on thisside of the fence at Avalari is
always quite interesting and, toanswer your question, the
(12:54):
complexity is driven by a numberof key things and location
stock is a really good example.
You know that's going to, inmost instances, trigger a tax
obligation by holding stock in awarehouse in a country, and
that might just translate into avery simple, straightforward
conversation with us where wehelp them with the registration
(13:16):
side of things and they'reactually able to leverage the
content, the tax content, withintheir e-compact, for example.
But if their key market is theUS or they're selling high value
items that are exposed tocustomer duties, then that
creates complexity and that'swhen the tax engine is needed
and that's when they want tomaybe talk to us about
(13:38):
calculating tax and getting itaccurate so that they're
compliant, and that leads to abetter customer experience if
you're able to present customerduties for international
investors.
So the size of the company doesnot always match the complexity
of their tax profile.
Speaker 1 (13:59):
Not just, I guess, when a business grows and its
complexity changes, but, like wealso touched on, the
jurisdictions change and so on.
How do you becausefundamentally you're a product
company, so you have a SaaSproduct which allows for tax
management calculation.
But I guess, how does Avalaramake sure that its customers are
(14:21):
up to date with what's going on, making sure that they're not
doing the same thing they'vealways done, just not aware that
their obligations have maybechanged?
Speaker 2 (14:31):
Yeah, sure, so we'll do that in a number of ways and
obviously it starts withcommunicating with our customers
.
So if you're leveraging anAvalara solution, then you are
going to be in the care of anaccount manager who has regular
check-ins with you and obviouslydiscuss your setup countries in
(14:51):
focus and will be able to putany legislative changes on your
radar and help you with stepsaccordingly.
And from there we havepublications such as monthly
maintenance guides that informour customers about tax rate
(15:14):
changes and things like that.
The good news is, most of thetime they're too busy to look at
that type of information.
They're getting on with theday-to-day and obviously that
content is automatically updatedin our solution set.
So I'm actually really have toworry about it.
But should they get queering bycustomer or tax notice, then
(15:35):
that information is available.
So, yeah, we have to work withthem in those ways to ensure
that they know where the answersare if they need them.
But at the same time, we don'thave to think about them at all
because, like I say, it's ourever-grown product content team.
It's on them to ensure that oursolutions have all the relevant
(15:58):
tax rates and logic up to date,so that really our merchants
don't have to worry about it.
Speaker 1 (16:05):
So next time somebody gets an email from Avalara or a
phone call, it's take notebecause there's something
important there that might helpyou further down the line.
Speaker 2 (16:16):
Yeah, usually, or maybe we're just inviting them
to run bar events or somethinglike that.
But yeah, governmentlegislation drives a lot of
communication for us and I guessthat's a good thing.
It's always good to be able tobe in touch with your customers
on a regular basis.
A lot of the time it's notreally going to be relevant for
them, unless it's a country offocus and, like I said, we make
(16:40):
sure that everything's up todate in our solutions, so the
merchants aren't really havingto think about that on a
day-to-day basis.
Speaker 1 (16:47):
So, as we said earlier, we get a lot of
requests when we speak tomerchants that are looking at
that cross-border opportunity,whether it's because they're
leveraging like amulti-storefront solution that
says, look, I can now translatemy website into another language
or push it into another region,or they're just looking at
expanding as part of theirstrategy.
(17:10):
And we've seen thatinternational cross-border trade
change a lot, certainly fromthe UK after Brexit, where we
actually had a lot of you sawmerchants in the European Union
not wanting to sell into the UKanymore because actually trying
to get the stock back was goingto be an issue and it's probably
cheaper to destroy it thanactually have it sent back,
(17:32):
which obviously from asustainability perspective is
not good.
So, as I said, we're seeingkind of a lot of those changes.
How do you help predominantly,how do you help merchants who
are looking to be able to haveas smooth of an expansion
(17:56):
internationally as possiblewithout having to spend 80% of
their time on 20% of theiroperation, which might just be
around tax and legalcomplications from moving stock
around?
Speaker 2 (18:10):
Yeah, sure I think with any complex area of
business, companies look toautomate it, and the large
degree of greatly offer is aform of automation for the
compliance process.
So, like anything, it takes abit of work to get the set up
(18:32):
implementing any sort of tech.
There's the initial steps thathave to be taken, but once the
right process is in place it'sgoing to offer something that's
going to be scalable.
So expanding into furtherregions is not really going to
be too much of a burden and onceyou're engaged as a customer,
(18:53):
for example, you'll have accessto the right people at Avalara
who can guide you on how to getregistered in any country or how
to add in tax collection usingyour own avatars as an example,
and how to add in tax filing ina particular country or
jurisdiction.
So, yeah, we look to automateas much as we can.
(19:16):
We are a tax technology company, product first company and yeah
, it's like any complex area ofbusiness.
It's just try and automate asmuch as you can so that you can
focus elsewhere.
Speaker 1 (19:30):
So there's a lot of investment needs to go in in
terms of time at the beginningto make sure that the platforms
set up to be able to manage thetax calculation side of things
and then really, once that'sdone, customers can kind of
continue growing their business,adding on products, selling to
different markets, knowing thatAvalara, having been integrated
correctly and being updated byyour tech platform anyway, just
(19:53):
allows us to focus on the salesand the marketing and the
product development rather thanactually having to worry about
the tax calculation in different.
You know, if they get an orderfrom France, hypothetically, and
it's maybe their first order,if they've got Avalara set up
correctly and knowing they'regoing to expand into the EU,
that country should in essencebe set up and they should have
the confidence to say thatorders come in, that person's
(20:15):
paid, you know we've collectedthe right amount of tax,
depending on the setup, orthey're going to pay the right
amount of tax and really focuson that rather than, I guess,
worrying that well, now we'vegot an order from Sweden.
So, you know, do we need tocheck if the tax calculation is
done correctly?
Kind of really making that theeffort at the beginning to make
(20:37):
sure that Avalara is integratedcorrectly, they set up correctly
to your, to your needs, thengives it a piece of mind to say,
right, that we can put to bedbecause it's been looked after,
it's ticking over and we canthen focus on on growing
business.
Speaker 2 (20:51):
Yeah, ticking over is a good way to put it.
To a degree, I'll say workingwith us is a good chance to
learn and also a good goodchance to ensure that tax is
part of your strategy goingforwards.
So you know, take that scenariofor selling to France.
You know, working with us,you're going to be exposed to
(21:12):
conversations around HS codes,for example.
You know the importance ofhaving your goods correctly
classified so that they can movethrough customs, have the
correct duty treatment appliedand so on.
So, whilst we're automating alot of things, like I say,
working with a personnel here atAvalara is going to give a
merchant more confidence in howto approach tax and incorporate
(21:36):
as part of their strategy,rather than potentially run away
from it and see it as somethingthat's incredibly complex.
Speaker 1 (21:43):
So let's touch on that kind of the tax strategy.
So from what is, I guess,trying to kind of you know?
Trying to kind of you know,compartmentalize a tax strategy
(22:03):
for a merchant, so maybe a UKbased merchant who is looking to
expand into the EU, so thatincludes Ireland, obviously, and
mainland Europe.
What would their, what would anideal tax strategy for them,
look like?
Yeah, because chances arethey're probably not doing it
today.
They're probably not thinkingI've got a really good tax
strategy for my internationalgrowth.
Speaker 2 (22:26):
Yeah, look, that's a really good example because you
know that merchant may or maynot be aware of some of the back
simplifications that came inJune 21, which is the Fios being
the import one-stop shop.
So previously you know you wouldhave to register in all of the
(22:47):
EU countries where you are thehit threshold or held stock, for
example, but now under IOT, youcan register in one country and
collect that in all of them, inall of the countries, all of
the states of the EU, and youcan submit the tax collectors
(23:08):
using that one form in that onecountry.
So it's a simplification.
Now it's a simpler process Tofile VAT in the EU, provided
you're aware of the scheme andthat you've got a partner to be
able to take you through it.
So that's a really good exampleof thinking all right.
So Brexit made EU VAT reallycomplex.
(23:31):
However, of the back of that,the EU back simplifications,
such as IOS, have actuallycreated a process that merchants
can leverage now.
So you know again, that keepsour VAT team incredibly busy, as
merchants who want to expandinto the EU but don't want to
(23:54):
have to have multipleregistrations, for example.
So you know a system like IOTis a good place to start.
Speaker 1 (24:02):
I don't know how many people I've spoken to who I
think, confidently believe theyunderstand tax laws and they're
not tax lawyers.
I certainly, you know, don'tclaim to be an expert on
international tax law, and soI've heard different sides of
the same argument and so on andvarying kind of conflicting
(24:27):
opinions.
What's one you've seen it fromyour perspective.
So, with specificallycross-border sales tax, do you
have like a misconception thatmaybe either you come across a
lot or you know within Avalara,it's an only thing that
merchants have misunderstood aparticular process or law or
(24:51):
whatever it is aroundcross-border sales when it comes
to sales tax, yeah, I think youknow a sales tax or a
transaction tax in general.
Speaker 2 (25:03):
maybe a misconception is a lack of awareness of how
it can affect the customerexperience.
So a lot of merchants come tous who want to sell on a DDP
basis, which means delivery dutypaid.
They want to move away from amodel known as DAP, which is
(25:23):
delivered at place and so tounderstand that one, it's
basically who covers the tax onthat shipment yeah exactly,
exactly, and so what do you want?
to take back obligation intotheir process and make it a
better experience for themerchant.
(25:43):
That's an area that, ifaddressed, can actually lead to
an increase in sales.
If you're creating a betterbuyer experience for customers
overseas, then there's going tobe less friction and when the
duties are paid up front, it'sgood to move through customs
easier.
There's less delays, an overall, the actual customer will be
(26:08):
able to see the fully landedcost of the transaction.
They'll be able to see fullytransparent price, which is the
tax calculation is part of that.
So that's why it's important.
So I'd say in my time at Abla,as a misconception, I say
obviously, yeah, tax isimportant for compliance.
You need to do it, but at thesame time, think about how it
(26:31):
could affect the customerexperience.
Speaker 1 (26:36):
It's a really good point because, like we said at
the beginning as well, aroundreturns, that sometimes it's
cheaper to destroy the productthan it is to collect it and
bring it back home.
If your customer knows, and weheard about those instances
where people were ordering stufffrom the EU, maybe in the 12
(26:57):
months after Brexit, and thecourier was turning up with the
parcel and the credit cardmachine to pay the £112 of duty
that was owed and a product thatwas maybe worth the same and
all those kind of sent out and Iwanted to send it back and
whatever.
And chances are that customerisn't going to buy that it was
(27:17):
very unlikely to buy from thatmerchant again, knowing that
actually they were under theimpression it's going to cost
them £100, but actually thecourier turned up and requested
another £100 of duty and theprice has now doubled.
So not only has the customernow got kind of a negative
experience, but now the merchantis left with a product that's
made its way around Europe andis going to be coming back to
(27:40):
their warehouse.
Speaker 2 (27:42):
Yeah, it's no different to a real-life
scenario.
Imagine if you walked into ashop on the high street and you
picked up a shirt.
You took it to the tillthinking it was £10, and then
you turned around and saidthat'll be £20, please, please,
you wouldn't be too happy withyou.
Speaker 1 (27:56):
I mean, I remember when I first started flying to
the US 30 years ago, but theprices that you kind of see on
the shelves don't include thetax and North.
America is a regular mathsbecause they did a calculation
while they're queuing up to pay.
But we're used to havingeverything with tax included,
whereas in other markets it'stax-exclusive because obviously
(28:18):
it's calculated at a point intime.
But I agree and I think this isjust on that around when you go
into a shop and you picksomething up and it's £10, and
then the cashier asks you foranother £10.
On top of that there's been Ithink sometimes merchants don't
make that distinction,especially in an age of where
we've got this kind ofcross-commerce where you can buy
(28:41):
online, buy in store, buy on anapp, buy on a marketplace,
whatever.
We're expecting this unifiedexperience where the prices may
be the same and the experienceis the same and any taxes and so
on.
So I think that's a really goodpoint you make around the
customer experience, becausewith everything a merchant
should be doing, I guess it's abit like reading the book Will
(29:04):
it Make the Boat Go Faster orMaking the Boat Go Faster.
That was written.
It was all about when thegrowing team was training for
the Olympics.
Every decision was Will it Makethe Boat Go Faster?
And merchants need to get intothis mindset of saying Will it
Improve the Customer Experience.
There might be a cost attachedto the merchant to implement an
app or a code of feature orwhatever it is, but if it
(29:27):
constantly improves theexperience, that will then lead
to higher sales, highconversions, happier customers,
advocates and so on.
And it's amazing how many smalltweaks you can make to a
website with systems likeAvalara that say look, we'll
give you the accurate, we'llgive your customers the accurate
product price, including taxes,depending where it's going, and
(29:49):
you haven't got to worry aboutcalling them back and saying
well, we're miscalculated, youneed to pay us another £50, or
then the customer will receive aproduct and then being asked to
pay the duty for it.
So then that's a really, reallyimportant takeaway from this
conversation.
Speaker 2 (30:04):
Yeah, I'm glad it feeds into that and because I
enjoy the e-commerce side ofthings, because obviously I'm a
consumer and I buy things onlineand obviously I look at how
taxes are taken into account.
But generally speaking, I loveall the cool little features
that you see.
When I was buying somethingonline the other day and I was
(30:24):
able to change the size when Iwas on the checkout page I
didn't have to go back into myown change of size I noticed
that.
I picked up on it.
So whoever designed thatfeature and implemented it,
thank you.
But yeah, I like all thoselittle things.
It certainly made the pro gofaster and get me through
checkout, so it's good to see inaction.
Speaker 1 (30:46):
I mean, I've had this conversation like shipping
calculation cameras, likeShipraise Q and it's like all
this unsexy, boring stuff thatyou kind of think, but actually
they're so critical in gettingthat conversion over the line
you can't underestimate it.
On the topic of kind ofcross-border, so for merchants
(31:06):
that may be evaluating it andsaying, right, let's you know,
because we're seeing at themoment, you know, cost of living
crisis, inflation, disposewilling, come down everything.
So sales are being hit.
I think we can all safely saythat you know the economy isn't
flourishing as it was maybe acouple of years ago.
And, speaking to merchants, youknow they're not necessarily
(31:28):
struggling.
You know they're seeing thatit's there's a couple of clouds,
aluminum overhead.
So you know, merchants, thehacker we could resales and
obviously one of the quick waysis to start selling
internationally.
Have you got any advice or tipsfor merchants that are
considering this avenue?
Because it's not, it is notcopy and paste.
(31:50):
You know you there's many othernuances around selling
internationally, but from a froma tax perspective, like we
spoke about tax strategy.
But what would you say to amerchant that's speaking to you
and saying I'm thinking of doingcross-border, at the moment
we're only selling the UK or anyselling the US, but now we're
in France and now we're lookingat selling internationally to
increase ourselves and ourglobal reach.
Speaker 2 (32:13):
Yeah, it's a really good question and spot on to say
it's not copy and paste,because I think there's many
moving parts of thatconversation and, really,
working closely with my partners, I pick up on things that you
know they publish on LinkedInand just, you know day-to-day
conversations for yourself.
You know I pick up on thethings that they'll address with
(32:34):
merchants.
You know, should you expandinternationally if you're not
retaining the customers that youhave in the UK, for example?
So I'd say, look, it's not aperfect fit for everybody, it
might not be the right time.
However, if you've got a nicheproduct that's in demand
somewhere else, then yeah, itmakes sense.
(32:55):
You know, we see a lot ofheritage brands doing really
well in the US.
They come to us becauseobviously they need help with
compliance, but they've goneaway and worked with other
partners to do their marketresearch and understand.
You know, is it going to beworth it?
And ultimately that decision isgenerally made before they
(33:17):
start talking to us.
They might be doing a bit ofbackground research and start
talking to us, but I'd say, yeah, work with the right agents to
be a partner who's got a trackrecord for helping brands go
internationally.
I think you know you're goingto learn more there, and then
obviously it will help where wecan.
Speaker 1 (33:39):
I was reading one of the e-commerce groups on social
media.
One of the merchants kind ofwas asking around apps and tech
partners that could help themwith, in essence, answer the
questions that kind of taxcalculation offers that they
(33:59):
didn't want to invest.
I guess is the point I'm tryingto make in working with an
agency.
A lot of them kind of try andcut that Cost and save that
money, saying well, I'll do itmyself, I just need to kind of
maybe pick up on two or threelittle things and that magic
dust will.
Then, you know and Whatever.
I don't get too involved butsometimes think you know you are
(34:21):
again we spoke about earlyYou're not investing in the
right places.
Like you, you work with anagency sometimes to make some
changes to your website and soon on the front end, which are,
which are equally important, butat the same time, these things
that kind of sit in thebackground and just you know
Maybe don't shout from therooftops.
Equally important to get anexpert in to make sure it's, and
(34:43):
maybe even more so becausewe're talking money here, like
if you're miscalculated tax onsales that you've done to a
particular region and Someonepicks up on that.
You know it's not quick fix andwell, we'll just, you know,
implement some JavaScript Likeyou got paybacks of money and
potentially a fine yeah.
Speaker 2 (34:58):
I'd add it.
You know we never had thatconversation in different ways
in the past.
You'll say, yeah, look, thereis a cost compliance, there is a
Time investment up front,there's a cost investment, but
at the same time you know what'sthe cost of non compliance.
You know when will you feelthat further downstream.
(35:21):
So we don't want to take thatapproach and say, good, you know
the government authorities willcrack down on you.
You know that's for thebusiness to decide.
But ultimately, I thinkCompliance is one of those
essential areas that you need toaddress it Sooner rather than
later and be proactive.
Because if you grow to acertain size then you know a
(35:44):
small, small issue could havepotentially got quite large and,
like you say, takes quite a bitof work to rectify and cost and
time.
And I see that all too oftenreally with projects that we
were involved in.
So I'd say to anybody Leslie,do have it For front of your
(36:05):
mind and do talk to your agencypartner about if you're working
with one.
But yeah, in sure that it'saddressed up front.
And, like I say, you know thesize of your company does not
correlate directly to thecomplexity of your tax profile.
You could be Very small companybut selling into somewhere like
the US for the very complex taxregime.
(36:28):
We could be a really bigcompany just selling into the EU
and Schemes like IOS.
Then it might be a bit morestraightforward.
Speaker 1 (36:37):
I on that and just kind of a guess of words to our
merchants Listening, it's quiteeasy to take for granted that
you will improve.
The process is when you hit aparticular milestone.
I've got a merchant they doover five million online and
they're still managing productsoff an Excel spreadsheet Five
(36:58):
million and they haven't gotlike one or two products, like
they've got a fair number ofproducts and it's just they've
grown and it's not been apriority for them to implement
the PIM.
And so again, like you've, youknow you said it might be that
with tax, that when they started, you know, setting on the
website doing half a million ayear, they did it a particular
way and then they've had acouple of years of growth and
(37:19):
now they're doing two and a halfmillion and they're still
managing tax the same way andactually they've kind of gone
off on his tangent rather thanmaintaining that level of
compliance that's needed.
You know, had they Invested atthe beginning and you know I'm
familiar with, you know, budgetsbeing tight, whatever but, like
we said, you know what's thecost of not complying, because
that's probably going to be alot, lot more than the
(37:39):
investment.
Speaker 2 (37:40):
Yeah, and I actually, I think on a positive note,
awareness has grown, you know,just with some of the content
that we provide to our partners,which they Circulate with their
customer base you know thatcould be true Accounting
partners or e-commerce partnerslike yourselves, or technology
partners.
So I think the awareness is outthere documentation and so on,
(38:04):
and obviously a lot of bestpractices, shares within
e-commerce particular.
You know webinars and postcardslike this.
So I think I Hope I'm right insaying that you know the
awareness is out there andeveryone has a bit more of a
grasp on it.
And, yeah, you know there's.
(38:26):
There's many analogies you couldspin for for tax.
You know it's the, it's thecrap on the rune stream let's me
get bigger, and you can go onall day.
But essentially, yeah, I know,I know you don't want to deal
with it, but have a look at it,talk to your relevant partners
about it and you know, but Ilike taking Well, as we kind of
(38:51):
tie up today's Episode, one ofthe things that I think is
really useful for our merchantsis to get your perspective of
any trends that you're seeing.
Speaker 1 (38:59):
Again, like I said, you speak to a lot of agency
partners, maybe other techpartners as well, other
merchants.
Are there any changes you'reseeing?
Are there any trends thatyou're seeing something around
the corner that maybe isn't somainstream yet and you'd be
willing to share with ourlisteners, specifically around
international sales, but if it'snot necessarily around kind of,
you know, international growth?
Speaker 2 (39:18):
it's.
Yeah, I think it's a point wetouched on earlier.
It's actually there's some somereal extra thought going into
which regions are going to be infocus.
I mean, going internationalmakes sense for some brands,
given what they sell.
You know, we work with a numberof fashion retailers from
(39:39):
Nordics and they have a veryparticular look and appeal for
the garments that they sell Tothe rest of the world and
because the Nordics is quitesmall, they have to go
International at an early stagein their career and the
development.
So you know that makes sensefor them.
But yeah, I think the trend is,you know, there is more
(40:03):
consideration with thesecompanies to say well, you know,
maybe we need to capitalise onOn our home markets first.
It really depends on what'sbeing sold.
Speaker 1 (40:14):
That's a really good point, I guess kind of is your,
you know, go back to your totaladdressable market, like you're
saying, in the Nordicsspecifically, or if your
market's fairly small and thatinternational growth is going to
come at an earlier stage thanmaybe for a larger market like
the UK or US, and then it'sreally harnessing the the
Avalara solution earlier so thatyou're set up for that growth,
(40:38):
even though maybe your businessisn't, isn't as mature as Is.
It would be for another, foranother market.
Very nice me to ask Our guestif kind of they'd mind sharing
neither the latest book thatthey've read or any podcast that
they listen to.
Speaker 2 (40:55):
Yeah, you got anything you can.
That's a good question.
So in terms of looks, thatwould be relevant.
Speaker 1 (41:02):
Probably what are your books that you enjoy.
Speaker 2 (41:03):
You know it's mind-blowing, like Around war
stories and things like that, sonot relevant for the podcast,
or about sports and so on, but Ithink that's relevant for this.
I think my my LinkedIn feed isalways really good.
My my partners are alwayswilling to Do real, real good
gold in there.
And then platform podcast.
(41:26):
I mean James Guards, theplatform podcast is really good,
but yeah, I listen to James asI learn a lot.
He's really knowledgeable.
It helps me understand moreabout other tech and e-commerce.
Speaker 1 (41:42):
So yeah, I listen to James as well.
Oh good, yeah, so Reallyawkward moment as an event.
It's one of those kind ofrushed events.
I was all over the place andthen I just look at this guy and
so I recognize even some Icouldn't put in a minute, anyway
, it's not so I'm gonna trainhome.
(42:03):
And I was James.
I was just I was kind ofstaring at this guy saying you
look really familiar, butbecause I kind of really wasn't
in the frame of mind fornetworking, just because I was
going between places and it'd bereally If you're listening to
his voice on the podcast at thesame time.
Well, it will link to to yourLinkedIn and to Avalara as well.
(42:25):
So, yeah, if anyone can alwaysget in touch, presuming that
LinkedIn is probably one of thebest ways Avalaracom for the
website.
Speaker 2 (42:34):
Yeah, that's it.
Yeah yeah, LinkedIn or my emailis jamesbriteavalaracom.
Feel free to get in touch andbe happy to help.
Speaker 1 (42:44):
Brilliant Well, James , thanks very much for your time
.
It's been really interestinglearning about tax genuinely,
and I think this is an episodethat listeners should take note
of because it's it'sfundamentally important.
It's not an optional, you knowkind of thing.
Tax management, tax compliantis, is very, very important, and
the bigger you grow which wehope all our merchants continue
(43:04):
to grow the bigger that problemcould become if it's not, if
it's not addressed and managedearly on.
So thank you very much for yourtime and insight.
Speaker 2 (43:13):
Yeah, yeah, thanks for it, thanks.
Speaker 1 (43:16):
Thank you very much.
Thank you for listening to theBigCommerce podcast.
If you've enjoyed today'sepisode, please leave us a
review, and if you'd like tolisten to other episodes that
might be of interest, you can doso on your favorite podcast
platform or atwwwthebigcommercepodcastcom.
Thank you very much forlistening and until next time.
(43:37):
Bye, bye.
Hi, welcome to the Big Commerce podcast.
Hello, welcome to a brand newepisode of the Big Commerce
podcast.
I'm your host, luigi, and intoday's episode I'm joined by
James Bright from Avalara.
Avalara is a tax managementsolution and partners with many
platforms, including BigCommerce, and in today's episode
(00:22):
we talk about the importance ofa tax strategy and some of the
common pitfalls that merchantscan come into when expanding
internationally, and why asolution like Avalara can really
help your business as itthrives and grows.
Hope you enjoy the show.
Hi, james, welcome to thepodcast.
Hi.
Speaker 2 (00:41):
Luigi.
Speaker 1 (00:42):
Thanks for having me.
Are you enjoying our wetweather here?
Speaker 2 (00:46):
Yeah, we were just saying that it's becoming a
recurring cleaning out the storyof the summer, so hopefully
it's going to pick up soon.
Speaker 1 (00:53):
Yeah, and now I remember the year of the
Olympics.
It was like a rainy year.
So we do kind of.
I don't know I'm not ameteorologist or anyone that
takes interest in the weather,but I think we must have these
ebb and flows where it's justgoing to be a washout.
Speaker 2 (01:06):
Yeah, and to be honest, people will hate me for
saying this, but I prefer thisto the scorching heatwave that
we had last year, becauseworking from home some of the
week it's uncomfortable, got ayoung family, my dog hates it,
and so on.
So yeah, I'm only about theweather outside, but it's
actually okay yeah.
Speaker 1 (01:28):
Well, I guess we have to pause for a second for our
clients and partners in thesouth of Europe who are kind of
like you, you haven't got a clue.
Speaker 2 (01:37):
Yeah, exactly.
Speaker 1 (01:39):
So look, james, thanks for taking time to come
on to the podcast.
You're from Avalara.
Why don't you just introduceyourself and the company that
you work for?
Yeah, sure?
Speaker 2 (01:50):
So my name is James Bright and I'm a Partnerships
Manager at Avalara.
I've been working for thecompany for around three and a
half years now, started off onthe sales side of things and
didn't have a tax background,but learned a lot very quickly.
And then, yeah, sort of foundmy way into a partnerships role
(02:12):
after about 18 months, andthat's primarily focused on
e-commerce, which I enjoy verymuch.
So, yeah, the company itselfwe've been going for near on 20
years now and was founded in theUS, all with the goal of
simplifying US sales, but nowwe've grown to become a global
(02:34):
company and now focus ontransactional taxes such as GAT,
gst and customs duty and allthat fun stuff.
So, yeah, that's me at thecompany.
Speaker 1 (02:44):
Which I guess kind of in the age of kind of
cross-border trading andinternational commerce, is
really important because kind oftax I guess is one of the few
consonants that pretty muchevery country is going to ask
you to comply with.
And kind of going back to theoriginal objective of
simplifying US tax management.
I mean, I've spoken withmerchants numerous times in the
(03:04):
US about tax management fordifferent states.
It's just incredible howcomplex it can become and the
responsibilities that themerchants in the US have in
terms of reporting and so on.
Speaker 2 (03:17):
Yeah, it really is.
The US is probably the mostcomplex tax-raging in the world
when it comes to the sheeramount of tax jurisdictions it
has and the sheer amount of taxrates that it has, and that
really makes it very difficultfor a merchant to get the right
tax treatment on an invoice.
(03:38):
So, yeah, that's how thecompany was founded really.
So I suppose we've gotsomething to be thankful for.
We've built a business to beable to solve that challenge.
But yeah, once you'vecalculated the tax, then of
course it's filing it and youknow, in different states
there's different ways to filethe taxes.
(04:00):
Some prefer it monthly, someprefer it quarterly.
Speaker 1 (04:04):
So no two states are the same as what I'm getting at.
Yeah, I mean, I guess it mightput you out of business, but
really, if they just got rid oftax altogether, the world would
be a much simpler place.
Speaker 2 (04:13):
Yeah, we wouldn't have much to talk about, to be
honest.
But yeah, and whilst tax is avery dry subject, it's obviously
tied to, you know, a necessarypart of the merchant strategy,
because, you know, if you don'taddress it in the enemy stages
(04:33):
then it can become a problem.
But obviously it's going tomake that as easy as possible.
Speaker 1 (04:38):
Well, let's try and make tax management as sex as
possible in the next half hour.
So, fundamentally, you startedoff in the US with the objective
of simplifying tax managementfor merchants.
So what's the methodologybehind that?
You know how Avalara approachestax management for recon
merchants predominantly.
Speaker 2 (04:59):
Yeah, sure.
So I mean we break it down intosort of three key areas and I
call them the three pillars ofcompliance.
So we'll help a merchantunderstand where they need to
register for tax and help themcomplete the process as required
.
We'll also help them calculatetax at the point of transaction.
You know whatever channelthat's happening on, if it's in
(05:19):
their ERP or their e-commerceplatform.
And then the third pillar isfiling the tax.
You know wherever they havethat tax obligation, we will
help them submit the tax on timeand correctly to be the
relevant authorities.
So I kind of just use thatthree pillar approach just to
simplify what is, overall, quitea complex process.
Speaker 1 (05:42):
So it's really kind of from an ATA's perspective.
Somebody's saying, right, Iwant to expand either
internationally or, if they'rein US and I want to start
selling kind of cross state andso on.
They can really start thatjourney with you because you'll
be able to kind of tell themthis is what you need to be
doing and then, once they'veregistered and done all the
necessary paperwork, you canthen make sure that they sell
(06:04):
complying to tax laws.
And then the reporting side ofthings on the various intervals
you said, whether it's monthlyor quarterly to different states
.
You help with that as well.
So really, from a merchant'sperspective, you really do
support them in a tax managementrole.
Speaker 2 (06:19):
Yeah, absolutely, and whilst we're first and foremost
a tax technology company, Imean to work at Avalari and
obviously you have to know abouttax and our account management
team and analysts are allexperts in what they do.
I mean they're on hand to beable to help merchants as and
when they have questions andobviously we're there to make
(06:40):
merchants aware of changes inlegislation and put things on
their radar so that they'reproactive with tax and not
having to react to a negativetax situation.
So, yeah, it's a combination ofservices, human input and
solutions in order to makecomplements manageable for the
merchants.
Speaker 1 (07:01):
I know kind of when I get asked questions by
merchants around tax like, myanswer is just like Avalara, I'm
not even getting into it, justAvalara.
Because I mean we had that a fewyears back with the one stop
shop where kind of, like you say, changes to legislation and
stuff that I cannot become likea tax expert, or even not even
expert, but just somebody thatstarts understanding tax changes
(07:21):
in different jurisdictions andso on.
So really also from ourperspective it's great because
it means that we've got anexpert partner that can take
that burden off us and say,right, we'll take you from here,
we'll advise and we'll makesure that everything's kept up
to date and comply.
Because you must have seen inthe last few years a big uptake
(07:43):
in terms of merchants thatincrease the cross border.
I mean, obviously with Brexitthere was a people that took a
step back, others that kind oftook a step forward.
So I don't know if it kind ofnetted itself out, but we get a
lot more requests from merchantslooking to do that cross border
trade and understanding whatare the tax implications for
(08:04):
them.
Speaker 2 (08:06):
Yeah, I mean that's a really good example of how
closely we work with partners.
I mean, avalara is a partnerfirst organisation and all of
our partners, whether they're atechnology partner, like
BitCommerce or Shopify, forexample, or whether they're an
agency partner, they're oftenbetter placed than we are to
(08:27):
identify a risk to theirmerchants' business and by
having that relationship meansthat agencies like yourself can
consult with us firsthand andthen engage with us and the
merchant conversation as andwhen required.
So working with partners isreally important to us and, as
you say, as those situationspresent themselves, such as
(08:50):
Brexit, we're on hand to be ableto deliver the content, to
drive awareness, but also have aconversation with these
merchants and figure out thebest way for them to handle
their compliance.
And just to touch briefly inBrexit, I mean, that's one of
those things where it creates alot of additional interest for
(09:11):
us, which was great but at thesame time, led to a very busy
period for us.
And yeah, you'd like to say somemerchants took a step back.
They didn't want to deal withit, no-transcript, had to get on
with it and ultimately addressit head on.
So, yeah, as and when theselegislative changes come in from
(09:32):
governments and so on.
You know it's at least one hand.
It's good for us.
At the same time, you know it'sdifficult for merchants and we
understand that.
So you know we want to workwith merchants and partners to
obviously be on hand as and whenit's needed.
Speaker 1 (09:48):
I don't know how many kind of webinars I've been done
through that period with Avalarand various trade organizations
to understand it, because it'sjust not possible to kind of
stay, you know, stay up to datewith all the various changes in.
you know, we're a global agency,so we work with merchants
throughout Europe, throughout,well, north America, usa and
(10:09):
Canada, and it's just notpossible for us to kind of keep
up to date with typelegislations there.
You obviously kind of sitfurther up the food channel, I
guess, where we are.
So we work with, obviously, ourset of merchants and you work
with platforms that have theiragencies, that have their
merchants, so you obviously havea wider net of merchants that
(10:29):
you work with.
Do you see some kind ofcommonality around the
challenges that merchants facetrying to kind of grow their
cross-border internationalcommerce business?
Speaker 2 (10:42):
Yeah, I mean.
The beauty about it is Avalar.
You're presented with manydifferent types of scenarios on
a day-to-day basis.
You know if we're dealing witha software company, their needs
are very different to ane-commerce merchant.
The legislation of differentgovernments will affect them in
different ways, but thecommonality is at the time it's
(11:06):
awareness.
You know we speak to companieswho are of a size where you
think they'll probably knowbetter, but in fact they've gone
into growth mode overnight andguess what?
They're now only addressing thetax situation in the way that
they want to.
So I would say that you knowawareness is something that we
(11:28):
spend a lot of our time.
You know, working with partnersand merchants, helping them
understand.
You know what they should bedoing from a compliance
perspective.
Like I said, we like tosimplify it by focusing on
registration, calculation andfiling, but often you know the
starting point.
Very much is difficult tounderstand.
You know, where should Iregister?
(11:49):
Where should I tell that?
Speaker 1 (11:51):
And you touched on their saying kind of you know
you've got merchants that havehad that kind of hyper growth or
at least some decent growth,and so you work with both, both
kind of you know, I guess,startups and SMBs, but also
enterprise merchants, to helpthem with their tax, tax
management.
Do you find that?
Does the process of taxmanagement change as a business
(12:16):
scale?
Like, do you find that thereare different complexities or
different I mean, I guess eventimes my question when you start
looking at merchants that havemaybe stock in different parts
of Europe and so on and whateffect that has on tax
calculation, depending wherethat stock goes?
Speaker 2 (12:34):
Yes, now, often the size of a business does not
match the complexity of theirtax profile and vice versa.
So it will depend, and that'swhat I say kind of every
scenario that you view on thisside of the fence at Avalari is
always quite interesting and, toanswer your question, the
(12:54):
complexity is driven by a numberof key things and location
stock is a really good example.
You know that's going to, inmost instances, trigger a tax
obligation by holding stock in awarehouse in a country, and
that might just translate into avery simple, straightforward
conversation with us where wehelp them with the registration
(13:16):
side of things and they'reactually able to leverage the
content, the tax content, withintheir e-compact, for example.
But if their key market is theUS or they're selling high value
items that are exposed tocustomer duties, then that
creates complexity and that'swhen the tax engine is needed
and that's when they want tomaybe talk to us about
(13:38):
calculating tax and getting itaccurate so that they're
compliant, and that leads to abetter customer experience if
you're able to present customerduties for international
investors.
So the size of the company doesnot always match the complexity
of their tax profile.
Speaker 1 (13:59):
Not just, I guess, when a business grows and its
complexity changes, but, like wealso touched on, the
jurisdictions change and so on.
How do you becausefundamentally you're a product
company, so you have a SaaSproduct which allows for tax
management calculation.
But I guess, how does Avalaramake sure that its customers are
(14:21):
up to date with what's going on, making sure that they're not
doing the same thing they'vealways done, just not aware that
their obligations have maybechanged?
Speaker 2 (14:31):
Yeah, sure, so we'll do that in a number of ways and
obviously it starts withcommunicating with our customers
.
So if you're leveraging anAvalara solution, then you are
going to be in the care of anaccount manager who has regular
check-ins with you and obviouslydiscuss your setup countries in
(14:51):
focus and will be able to putany legislative changes on your
radar and help you with stepsaccordingly.
And from there we havepublications such as monthly
maintenance guides that informour customers about tax rate
(15:14):
changes and things like that.
The good news is, most of thetime they're too busy to look at
that type of information.
They're getting on with theday-to-day and obviously that
content is automatically updatedin our solution set.
So I'm actually really have toworry about it.
But should they get queering bycustomer or tax notice, then
(15:35):
that information is available.
So, yeah, we have to work withthem in those ways to ensure
that they know where the answersare if they need them.
But at the same time, we don'thave to think about them at all
because, like I say, it's ourever-grown product content team.
It's on them to ensure that oursolutions have all the relevant
(15:58):
tax rates and logic up to date,so that really our merchants
don't have to worry about it.
Speaker 1 (16:05):
So next time somebody gets an email from Avalara or a
phone call, it's take notebecause there's something
important there that might helpyou further down the line.
Speaker 2 (16:16):
Yeah, usually, or maybe we're just inviting them
to run bar events or somethinglike that.
But yeah, governmentlegislation drives a lot of
communication for us and I guessthat's a good thing.
It's always good to be able tobe in touch with your customers
on a regular basis.
A lot of the time it's notreally going to be relevant for
them, unless it's a country offocus and, like I said, we make
(16:40):
sure that everything's up todate in our solutions, so the
merchants aren't really havingto think about that on a
day-to-day basis.
Speaker 1 (16:47):
So, as we said earlier, we get a lot of
requests when we speak tomerchants that are looking at
that cross-border opportunity,whether it's because they're
leveraging like amulti-storefront solution that
says, look, I can now translatemy website into another language
or push it into another region,or they're just looking at
expanding as part of theirstrategy.
(17:10):
And we've seen thatinternational cross-border trade
change a lot, certainly fromthe UK after Brexit, where we
actually had a lot of you sawmerchants in the European Union
not wanting to sell into the UKanymore because actually trying
to get the stock back was goingto be an issue and it's probably
cheaper to destroy it thanactually have it sent back,
(17:32):
which obviously from asustainability perspective is
not good.
So, as I said, we're seeingkind of a lot of those changes.
How do you help predominantly,how do you help merchants who
are looking to be able to haveas smooth of an expansion
(17:56):
internationally as possiblewithout having to spend 80% of
their time on 20% of theiroperation, which might just be
around tax and legalcomplications from moving stock
around?
Speaker 2 (18:10):
Yeah, sure I think with any complex area of
business, companies look toautomate it, and the large
degree of greatly offer is aform of automation for the
compliance process.
So, like anything, it takes abit of work to get the set up
(18:32):
implementing any sort of tech.
There's the initial steps thathave to be taken, but once the
right process is in place it'sgoing to offer something that's
going to be scalable.
So expanding into furtherregions is not really going to
be too much of a burden and onceyou're engaged as a customer,
(18:53):
for example, you'll have accessto the right people at Avalara
who can guide you on how to getregistered in any country or how
to add in tax collection usingyour own avatars as an example,
and how to add in tax filing ina particular country or
jurisdiction.
So, yeah, we look to automateas much as we can.
(19:16):
We are a tax technology company, product first company and yeah
, it's like any complex area ofbusiness.
It's just try and automate asmuch as you can so that you can
focus elsewhere.
Speaker 1 (19:30):
So there's a lot of investment needs to go in in
terms of time at the beginningto make sure that the platforms
set up to be able to manage thetax calculation side of things
and then really, once that'sdone, customers can kind of
continue growing their business,adding on products, selling to
different markets, knowing thatAvalara, having been integrated
correctly and being updated byyour tech platform anyway, just
(19:53):
allows us to focus on the salesand the marketing and the
product development rather thanactually having to worry about
the tax calculation in different.
You know, if they get an orderfrom France, hypothetically, and
it's maybe their first order,if they've got Avalara set up
correctly and knowing they'regoing to expand into the EU,
that country should in essencebe set up and they should have
the confidence to say thatorders come in, that person's
(20:15):
paid, you know we've collectedthe right amount of tax,
depending on the setup, orthey're going to pay the right
amount of tax and really focuson that rather than, I guess,
worrying that well, now we'vegot an order from Sweden.
So, you know, do we need tocheck if the tax calculation is
done correctly?
Kind of really making that theeffort at the beginning to make
(20:37):
sure that Avalara is integratedcorrectly, they set up correctly
to your, to your needs, thengives it a piece of mind to say,
right, that we can put to bedbecause it's been looked after,
it's ticking over and we canthen focus on on growing
business.
Speaker 2 (20:51):
Yeah, ticking over is a good way to put it.
To a degree, I'll say workingwith us is a good chance to
learn and also a good goodchance to ensure that tax is
part of your strategy goingforwards.
So you know, take that scenariofor selling to France.
You know, working with us,you're going to be exposed to
(21:12):
conversations around HS codes,for example.
You know the importance ofhaving your goods correctly
classified so that they can movethrough customs, have the
correct duty treatment appliedand so on.
So, whilst we're automating alot of things, like I say,
working with a personnel here atAvalara is going to give a
merchant more confidence in howto approach tax and incorporate
(21:36):
as part of their strategy,rather than potentially run away
from it and see it as somethingthat's incredibly complex.
Speaker 1 (21:43):
So let's touch on that kind of the tax strategy.
So from what is, I guess,trying to kind of you know?
Trying to kind of you know,compartmentalize a tax strategy
(22:03):
for a merchant, so maybe a UKbased merchant who is looking to
expand into the EU, so thatincludes Ireland, obviously, and
mainland Europe.
What would their, what would anideal tax strategy for them,
look like?
Yeah, because chances arethey're probably not doing it
today.
They're probably not thinkingI've got a really good tax
strategy for my internationalgrowth.
Speaker 2 (22:26):
Yeah, look, that's a really good example because you
know that merchant may or maynot be aware of some of the back
simplifications that came inJune 21, which is the Fios being
the import one-stop shop.
So previously you know you wouldhave to register in all of the
(22:47):
EU countries where you are thehit threshold or held stock, for
example, but now under IOT, youcan register in one country and
collect that in all of them, inall of the countries, all of
the states of the EU, and youcan submit the tax collectors
(23:08):
using that one form in that onecountry.
So it's a simplification.
Now it's a simpler process Tofile VAT in the EU, provided
you're aware of the scheme andthat you've got a partner to be
able to take you through it.
So that's a really good exampleof thinking all right.
So Brexit made EU VAT reallycomplex.
(23:31):
However, of the back of that,the EU back simplifications,
such as IOS, have actuallycreated a process that merchants
can leverage now.
So you know again, that keepsour VAT team incredibly busy, as
merchants who want to expandinto the EU but don't want to
(23:54):
have to have multipleregistrations, for example.
So you know a system like IOTis a good place to start.
Speaker 1 (24:02):
I don't know how many people I've spoken to who I
think, confidently believe theyunderstand tax laws and they're
not tax lawyers.
I certainly, you know, don'tclaim to be an expert on
international tax law, and soI've heard different sides of
the same argument and so on andvarying kind of conflicting
(24:27):
opinions.
What's one you've seen it fromyour perspective.
So, with specificallycross-border sales tax, do you
have like a misconception thatmaybe either you come across a
lot or you know within Avalara,it's an only thing that
merchants have misunderstood aparticular process or law or
(24:51):
whatever it is aroundcross-border sales when it comes
to sales tax, yeah, I think youknow a sales tax or a
transaction tax in general.
Speaker 2 (25:03):
maybe a misconception is a lack of awareness of how
it can affect the customerexperience.
So a lot of merchants come tous who want to sell on a DDP
basis, which means delivery dutypaid.
They want to move away from amodel known as DAP, which is
(25:23):
delivered at place and so tounderstand that one, it's
basically who covers the tax onthat shipment yeah exactly,
exactly, and so what do you want?
to take back obligation intotheir process and make it a
better experience for themerchant.
(25:43):
That's an area that, ifaddressed, can actually lead to
an increase in sales.
If you're creating a betterbuyer experience for customers
overseas, then there's going tobe less friction and when the
duties are paid up front, it'sgood to move through customs
easier.
There's less delays, an overall, the actual customer will be
(26:08):
able to see the fully landedcost of the transaction.
They'll be able to see fullytransparent price, which is the
tax calculation is part of that.
So that's why it's important.
So I'd say in my time at Abla,as a misconception, I say
obviously, yeah, tax isimportant for compliance.
You need to do it, but at thesame time, think about how it
(26:31):
could affect the customerexperience.
Speaker 1 (26:36):
It's a really good point because, like we said at
the beginning as well, aroundreturns, that sometimes it's
cheaper to destroy the productthan it is to collect it and
bring it back home.
If your customer knows, and weheard about those instances
where people were ordering stufffrom the EU, maybe in the 12
(26:57):
months after Brexit, and thecourier was turning up with the
parcel and the credit cardmachine to pay the £112 of duty
that was owed and a product thatwas maybe worth the same and
all those kind of sent out and Iwanted to send it back and
whatever.
And chances are that customerisn't going to buy that it was
(27:17):
very unlikely to buy from thatmerchant again, knowing that
actually they were under theimpression it's going to cost
them £100, but actually thecourier turned up and requested
another £100 of duty and theprice has now doubled.
So not only has the customernow got kind of a negative
experience, but now the merchantis left with a product that's
made its way around Europe andis going to be coming back to
(27:40):
their warehouse.
Speaker 2 (27:42):
Yeah, it's no different to a real-life
scenario.
Imagine if you walked into ashop on the high street and you
picked up a shirt.
You took it to the tillthinking it was £10, and then
you turned around and saidthat'll be £20, please, please,
you wouldn't be too happy withyou.
Speaker 1 (27:56):
I mean, I remember when I first started flying to
the US 30 years ago, but theprices that you kind of see on
the shelves don't include thetax and North.
America is a regular mathsbecause they did a calculation
while they're queuing up to pay.
But we're used to havingeverything with tax included,
whereas in other markets it'stax-exclusive because obviously
(28:18):
it's calculated at a point intime.
But I agree and I think this isjust on that around when you go
into a shop and you picksomething up and it's £10, and
then the cashier asks you foranother £10.
On top of that there's been Ithink sometimes merchants don't
make that distinction,especially in an age of where
we've got this kind ofcross-commerce where you can buy
(28:41):
online, buy in store, buy on anapp, buy on a marketplace,
whatever.
We're expecting this unifiedexperience where the prices may
be the same and the experienceis the same and any taxes and so
on.
So I think that's a really goodpoint you make around the
customer experience, becausewith everything a merchant
should be doing, I guess it's abit like reading the book Will
(29:04):
it Make the Boat Go Faster orMaking the Boat Go Faster.
That was written.
It was all about when thegrowing team was training for
the Olympics.
Every decision was Will it Makethe Boat Go Faster?
And merchants need to get intothis mindset of saying Will it
Improve the Customer Experience.
There might be a cost attachedto the merchant to implement an
app or a code of feature orwhatever it is, but if it
(29:27):
constantly improves theexperience, that will then lead
to higher sales, highconversions, happier customers,
advocates and so on.
And it's amazing how many smalltweaks you can make to a
website with systems likeAvalara that say look, we'll
give you the accurate, we'llgive your customers the accurate
product price, including taxes,depending where it's going, and
(29:49):
you haven't got to worry aboutcalling them back and saying
well, we're miscalculated, youneed to pay us another £50, or
then the customer will receive aproduct and then being asked to
pay the duty for it.
So then that's a really, reallyimportant takeaway from this
conversation.
Speaker 2 (30:04):
Yeah, I'm glad it feeds into that and because I
enjoy the e-commerce side ofthings, because obviously I'm a
consumer and I buy things onlineand obviously I look at how
taxes are taken into account.
But generally speaking, I loveall the cool little features
that you see.
When I was buying somethingonline the other day and I was
(30:24):
able to change the size when Iwas on the checkout page I
didn't have to go back into myown change of size I noticed
that.
I picked up on it.
So whoever designed thatfeature and implemented it,
thank you.
But yeah, I like all thoselittle things.
It certainly made the pro gofaster and get me through
checkout, so it's good to see inaction.
Speaker 1 (30:46):
I mean, I've had this conversation like shipping
calculation cameras, likeShipraise Q and it's like all
this unsexy, boring stuff thatyou kind of think, but actually
they're so critical in gettingthat conversion over the line
you can't underestimate it.
On the topic of kind ofcross-border, so for merchants
(31:06):
that may be evaluating it andsaying, right, let's you know,
because we're seeing at themoment, you know, cost of living
crisis, inflation, disposewilling, come down everything.
So sales are being hit.
I think we can all safely saythat you know the economy isn't
flourishing as it was maybe acouple of years ago.
And, speaking to merchants, youknow they're not necessarily
(31:28):
struggling.
You know they're seeing thatit's there's a couple of clouds,
aluminum overhead.
So you know, merchants, thehacker we could resales and
obviously one of the quick waysis to start selling
internationally.
Have you got any advice or tipsfor merchants that are
considering this avenue?
Because it's not, it is notcopy and paste.
(31:50):
You know you there's many othernuances around selling
internationally, but from a froma tax perspective, like we
spoke about tax strategy.
But what would you say to amerchant that's speaking to you
and saying I'm thinking of doingcross-border, at the moment
we're only selling the UK or anyselling the US, but now we're
in France and now we're lookingat selling internationally to
increase ourselves and ourglobal reach.
Speaker 2 (32:13):
Yeah, it's a really good question and spot on to say
it's not copy and paste,because I think there's many
moving parts of thatconversation and, really,
working closely with my partners, I pick up on things that you
know they publish on LinkedInand just, you know day-to-day
conversations for yourself.
You know I pick up on thethings that they'll address with
(32:34):
merchants.
You know, should you expandinternationally if you're not
retaining the customers that youhave in the UK, for example?
So I'd say, look, it's not aperfect fit for everybody, it
might not be the right time.
However, if you've got a nicheproduct that's in demand
somewhere else, then yeah, itmakes sense.
(32:55):
You know, we see a lot ofheritage brands doing really
well in the US.
They come to us becauseobviously they need help with
compliance, but they've goneaway and worked with other
partners to do their marketresearch and understand.
You know, is it going to beworth it?
And ultimately that decision isgenerally made before they
(33:17):
start talking to us.
They might be doing a bit ofbackground research and start
talking to us, but I'd say, yeah, work with the right agents to
be a partner who's got a trackrecord for helping brands go
internationally.
I think you know you're goingto learn more there, and then
obviously it will help where wecan.
Speaker 1 (33:39):
I was reading one of the e-commerce groups on social
media.
One of the merchants kind ofwas asking around apps and tech
partners that could help themwith, in essence, answer the
questions that kind of taxcalculation offers that they
(33:59):
didn't want to invest.
I guess is the point I'm tryingto make in working with an
agency.
A lot of them kind of try andcut that Cost and save that
money, saying well, I'll do itmyself, I just need to kind of
maybe pick up on two or threelittle things and that magic
dust will.
Then, you know and Whatever.
I don't get too involved butsometimes think you know you are
(34:21):
again we spoke about earlyYou're not investing in the
right places.
Like you, you work with anagency sometimes to make some
changes to your website and soon on the front end, which are,
which are equally important, butat the same time, these things
that kind of sit in thebackground and just you know
Maybe don't shout from therooftops.
Equally important to get anexpert in to make sure it's, and
(34:43):
maybe even more so becausewe're talking money here, like
if you're miscalculated tax onsales that you've done to a
particular region and Someonepicks up on that.
You know it's not quick fix andwell, we'll just, you know,
implement some JavaScript Likeyou got paybacks of money and
potentially a fine yeah.
Speaker 2 (34:58):
I'd add it.
You know we never had thatconversation in different ways
in the past.
You'll say, yeah, look, thereis a cost compliance, there is a
Time investment up front,there's a cost investment, but
at the same time you know what'sthe cost of non compliance.
You know when will you feelthat further downstream.
(35:21):
So we don't want to take thatapproach and say, good, you know
the government authorities willcrack down on you.
You know that's for thebusiness to decide.
But ultimately, I thinkCompliance is one of those
essential areas that you need toaddress it Sooner rather than
later and be proactive.
Because if you grow to acertain size then you know a
(35:44):
small, small issue could havepotentially got quite large and,
like you say, takes quite a bitof work to rectify and cost and
time.
And I see that all too oftenreally with projects that we
were involved in.
So I'd say to anybody Leslie,do have it For front of your
(36:05):
mind and do talk to your agencypartner about if you're working
with one.
But yeah, in sure that it'saddressed up front.
And, like I say, you know thesize of your company does not
correlate directly to thecomplexity of your tax profile.
You could be Very small companybut selling into somewhere like
the US for the very complex taxregime.
(36:28):
We could be a really bigcompany just selling into the EU
and Schemes like IOS.
Then it might be a bit morestraightforward.
Speaker 1 (36:37):
I on that and just kind of a guess of words to our
merchants Listening, it's quiteeasy to take for granted that
you will improve.
The process is when you hit aparticular milestone.
I've got a merchant they doover five million online and
they're still managing productsoff an Excel spreadsheet Five
(36:58):
million and they haven't gotlike one or two products, like
they've got a fair number ofproducts and it's just they've
grown and it's not been apriority for them to implement
the PIM.
And so again, like you've, youknow you said it might be that
with tax, that when they started, you know, setting on the
website doing half a million ayear, they did it a particular
way and then they've had acouple of years of growth and
(37:19):
now they're doing two and a halfmillion and they're still
managing tax the same way andactually they've kind of gone
off on his tangent rather thanmaintaining that level of
compliance that's needed.
You know, had they Invested atthe beginning and you know I'm
familiar with, you know, budgetsbeing tight, whatever but, like
we said, you know what's thecost of not complying, because
that's probably going to be alot, lot more than the
(37:39):
investment.
Speaker 2 (37:40):
Yeah, and I actually, I think on a positive note,
awareness has grown, you know,just with some of the content
that we provide to our partners,which they Circulate with their
customer base you know thatcould be true Accounting
partners or e-commerce partnerslike yourselves, or technology
partners.
So I think the awareness is outthere documentation and so on,
(38:04):
and obviously a lot of bestpractices, shares within
e-commerce particular.
You know webinars and postcardslike this.
So I think I Hope I'm right insaying that you know the
awareness is out there andeveryone has a bit more of a
grasp on it.
And, yeah, you know there's.
(38:26):
There's many analogies you couldspin for for tax.
You know it's the, it's thecrap on the rune stream let's me
get bigger, and you can go onall day.
But essentially, yeah, I know,I know you don't want to deal
with it, but have a look at it,talk to your relevant partners
about it and you know, but Ilike taking Well, as we kind of
(38:51):
tie up today's Episode, one ofthe things that I think is
really useful for our merchantsis to get your perspective of
any trends that you're seeing.
Speaker 1 (38:59):
Again, like I said, you speak to a lot of agency
partners, maybe other techpartners as well, other
merchants.
Are there any changes you'reseeing?
Are there any trends thatyou're seeing something around
the corner that maybe isn't somainstream yet and you'd be
willing to share with ourlisteners, specifically around
international sales, but if it'snot necessarily around kind of,
you know, international growth?
Speaker 2 (39:18):
it's.
Yeah, I think it's a point wetouched on earlier.
It's actually there's some somereal extra thought going into
which regions are going to be infocus.
I mean, going internationalmakes sense for some brands,
given what they sell.
You know, we work with a numberof fashion retailers from
(39:39):
Nordics and they have a veryparticular look and appeal for
the garments that they sell Tothe rest of the world and
because the Nordics is quitesmall, they have to go
International at an early stagein their career and the
development.
So you know that makes sensefor them.
But yeah, I think the trend is,you know, there is more
(40:03):
consideration with thesecompanies to say well, you know,
maybe we need to capitalise onOn our home markets first.
It really depends on what'sbeing sold.
Speaker 1 (40:14):
That's a really good point, I guess kind of is your,
you know, go back to your totaladdressable market, like you're
saying, in the Nordicsspecifically, or if your
market's fairly small and thatinternational growth is going to
come at an earlier stage thanmaybe for a larger market like
the UK or US, and then it'sreally harnessing the the
Avalara solution earlier so thatyou're set up for that growth,
(40:38):
even though maybe your businessisn't, isn't as mature as Is.
It would be for another, foranother market.
Very nice me to ask Our guestif kind of they'd mind sharing
neither the latest book thatthey've read or any podcast that
they listen to.
Speaker 2 (40:55):
Yeah, you got anything you can.
That's a good question.
So in terms of looks, thatwould be relevant.
Speaker 1 (41:02):
Probably what are your books that you enjoy.
Speaker 2 (41:03):
You know it's mind-blowing, like Around war
stories and things like that, sonot relevant for the podcast,
or about sports and so on, but Ithink that's relevant for this.
I think my my LinkedIn feed isalways really good.
My my partners are alwayswilling to Do real, real good
gold in there.
And then platform podcast.
(41:26):
I mean James Guards, theplatform podcast is really good,
but yeah, I listen to James asI learn a lot.
He's really knowledgeable.
It helps me understand moreabout other tech and e-commerce.
Speaker 1 (41:42):
So yeah, I listen to James as well.
Oh good, yeah, so Reallyawkward moment as an event.
It's one of those kind ofrushed events.
I was all over the place andthen I just look at this guy and
so I recognize even some Icouldn't put in a minute, anyway
, it's not so I'm gonna trainhome.
(42:03):
And I was James.
I was just I was kind ofstaring at this guy saying you
look really familiar, butbecause I kind of really wasn't
in the frame of mind fornetworking, just because I was
going between places and it'd bereally If you're listening to
his voice on the podcast at thesame time.
Well, it will link to to yourLinkedIn and to Avalara as well.
(42:25):
So, yeah, if anyone can alwaysget in touch, presuming that
LinkedIn is probably one of thebest ways Avalaracom for the
website.
Speaker 2 (42:34):
Yeah, that's it.
Yeah yeah, LinkedIn or my emailis jamesbriteavalaracom.
Feel free to get in touch andbe happy to help.
Speaker 1 (42:44):
Brilliant Well, James , thanks very much for your time
.
It's been really interestinglearning about tax genuinely,
and I think this is an episodethat listeners should take note
of because it's it'sfundamentally important.
It's not an optional, you knowkind of thing.
Tax management, tax compliantis, is very, very important, and
the bigger you grow which wehope all our merchants continue
(43:04):
to grow the bigger that problemcould become if it's not, if
it's not addressed and managedearly on.
So thank you very much for yourtime and insight.
Speaker 2 (43:13):
Yeah, yeah, thanks for it, thanks.
Speaker 1 (43:16):
Thank you very much.
Thank you for listening to theBigCommerce podcast.
If you've enjoyed today'sepisode, please leave us a
review, and if you'd like tolisten to other episodes that
might be of interest, you can doso on your favorite podcast
platform or atwwwthebigcommercepodcastcom.
Thank you very much forlistening and until next time.
(43:37):
Bye, bye.
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I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com